I can't say I like Vietnam's odds against the Chinese navy as it joins the Philippines in pushing back against moves to assert control over the resources of disputed maritime areas. But this escalation in tensions nudges Asia into decidedly uncharted territory, leaving markets in a bizarre state of geopolitical limbo (Vietnam stocks are headed for their biggest retreat since 2001). What's China is up to? Why has it chosen this moment to drill near the Paracel Islands, claimed by both Beijing and Hanoi? And why are Chinese fishermen showing up near a disputed shoal close to the Spratly Islands, which Manila claims? Among the many tantalizing possibilities is that Beijing is testing Washington's resolve after it failed to come to Ukraine's defense. While only time tell, things just got a whole more dangerous in Asian seas.

Meanwhile, other Asian markets got a brief reprieve from the Federal Reserve tightening worries of the last year. Stocks jumped after Fed Chair Janet Yellen made it clear the U.S. still requires a strong dose of monetary stimulus -- with an assist from data showing China’s exports and imports unexpectedly rose in April. Still, Asia isn't in the clear. The Fed's tapering process remains a clear and present danger to the outlook. So does the risk that tensions related to China's territorial disputes intensify. If that happens, Yellen's interest rate hikes might be the least of Asia's worries.

In case Nintendo has forgotten, it makes video machines and games. Stuff that helps bored people pass the time. What it shouldn't be making is social policy. That hasn't stopped the Kyoto-based company from veering awkwardly in that direction, telling gamers they aren’t allowed to play its upcoming life-simulation game as a gay person. Ironically, it's called "Tomodachi Life," a reference to the Japanese word for "friend." It's bad for business to establish yourself as an enemy of the lesbian, bi-sexual, gay and transgender community.

Economists trying to divine Japan's future pour over reams of data on exports, wages and stock valuations. This Wall Street Journal piece suggests a more human indicator: the dwindling ranks of children. Last year marked the 33rd in row in which the demographic that constitutes the nation's future declined. In 2013, the number of kids was the lowest since the government began collecting data in 1950. That trajectory would be less worrisome if Japan weren't the most indebted nation on the planet and the government were more keen on mass immigration. Unless officials in Tokyo direct more attention to this problem, credit-rating companies will do it for them.

With the dust settling after Thailand's Constitutional Court ousted Yingluck Shinawatra, acting premier Niwattumrong Boonsongpaisan is doing his best to stave off a complete collapse of governing institutions. Now, hopes that Thailand can still pull off a July 20 vote are very much in doubt. For a look at the myriad possible scenarios, here's a Forbes reality check that concludes, quite ominously: "For investors, there are far, far better prospects to be found elsewhere in Southeast Asia."

To contact the writer of this article: William Pesek at wpesek@bloomberg.net

To contact the editor responsible for this article: Nisid Hajari at nhajari@bloomberg.net

William Pesek is a Bloomberg View columnist based in Tokyo and writes on economics, markets and politics throughout the Asia-Pacific region. His journalism awards include the 2010 Society of American Business Editors and Writers prize for commentary.
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